Don't put Scotland's competitiveness at risk

CBI Scotland calls for tax parity across the UK and a Budget focussed on boosting productivity.

Ahead of the forthcoming 2018-19 Scottish Budget, CBI Scotland has warned the Scottish Government that Scotland’s competitiveness could be put at risk by creating divergence with the rest of the UK on income tax and business rates.

Following the UK Budget last week, business is clear that income tax parity must be maintained across the UK and that the Scottish Government should follow the Chancellor’s lead by linking business rate increases to CPI rather than RPI and matching the UK timetable for implementation.

CBI Scotland is calling on Finance Secretary Derek Mackay to use the Scottish Budget to issue a clear signal that Scotland is an open and attractive destination for business with a stable and competitive system of tax and regulation.

The CBI Scotland submission also urges the Scottish Government to embrace a relentless long-term focus on improving productivity in order to deliver the sustainable growth, high quality public services and increased living standards Scotland needs.

In line with findings from CBI Scotland’s recent Pursuing Prosperity report, the submission outlines four immediate priorities

Tax and regulation – Ensure parity of income tax and business rate regimes with rest of UK to support household spending and help businesses attract and retain talent

Education and skills – Allocate a greater share of Apprenticeship Levy funds to the Flexible Workforce Development Fund to help businesses tackle skills gap

Infrastructure – Deliver the current pipeline of transport infrastructure commitments as quickly as possible and improve transport links with the rest of the UK to drive productivity gains

Innovation – Set a target for combined public and private expenditure on research and development as percentage of GDP

“With economic growth remaining fragile and uncertainty weighing on the outlook, Scotland desperately needs a Budget that will deliver for people and business – one that is committed to boosting productivity through strengthening skills, infrastructure and innovation.

“Boosting Scotland’s productivity is the only sure-fire way to grow our economy, generate the revenues we need for quality, sustainable public services and raise living standards across the board. These are goals we all share and business has a role in working with government to achieve them.

“On income tax and business rates, we simply can’t afford for a chasm to open up between Scotland and the rest of the UK if we want to remain competitive. Variance across the UK would make it more difficult for our businesses to attract and retain talent they need and could make investors think twice about setting up shop here in Scotland. With inflation at a three year high and outpacing wage growth, we should avoid putting extra pressures on household incomes.

“Make no mistake, this Budget comes at a critical juncture for the Scottish economy. Moves which would make Scotland less competitive or less attractive must be avoided at all costs.”